Minister Yitzhak Rabin to lead the country into a new era of peace with its Arab neighbors, last night approved a series of historic agreements reached with the Palestine Liberation Organization to begin the establishment of a Palestinian homeland.

While nearly 4,000 angry right-wing demonstrators outside denounced the accord as a danger to Israel's existence, the Cabinet voted to sign a broad "declaration of principles" that provides for Israeli withdrawal from the Gaza Strip and for Palestinian self-government on the West Bank.

Sixteen members of the Cabinet voted for the proposal, and two -- Economics Minister Shimon Shetreet and Interior Minister Aryeh Deri -- abstained after a discussion that continued for more than five hours, ending after midnight.

Saying that the time had come to "take a risk for peace," Mr. Rabin portrayed the agreement with the Palestinians as the key to a broad peace in the Middle East, one that will assure Israel's security into the next century.

"We stand on the verge of a great opportunity," Mr. Rabin told members of Israel's parliament, the Knesset. "There is movement along the whole Arab front in readiness for peace. There are big obstacles, there are difficulties, but I am convinced the horizons for peace are open."

"A solution to the problem with the Palestinians is a solution for the focus of the Arab-Israeli conflict," he said. "What has been achieved . . . is a big step forward in moving Israel toward peace with the neighboring countries, first and foremost with the Palestinians."

Foreign Minister Shimon Peres, who negotiated the accord in a series of secret meetings with senior PLO officials, told the Knesset in an impassioned plea for support, "The 100-year-old conflict between us and the Palestinians is now starting to come to an end."

The result of this accord, Mr. Peres predicted, his voice cracking with emotion, will be "an opening to 100 years of interchange and good-neighborliness -- each people beneath its own flag, each people with its own prayer book, all of the peoples of the region in economic cooperation."

The agreements, which include a statement on future negotiations as well as a pledge of economic cooperation, are expected to be signed by the Israeli and Palestinian delegations to the Arab-Israeli peace talks, which resume today in Washington.

The agreement with the Palestinians, Mr. Rabin said, should open the way to early progress with Syria, Lebanon and Jordan in the 22-month-old peace talks.

"There will be criticism, and people will talk about problems here and problems there," Mr. Rabin acknowledged. "But big acts cannot be done without programs and without reasonable risks. . . . We committed ourselves not just to talk about peace, but to make peace."

Despite the political, military and administrative complexity of the move, Israeli officials said the two sides would commit themselves to working out implementation of the plan by the end of the year. Under this timetable, Israeli forces would start withdrawing from Gaza in six months and later from around the West Bank town of Jericho.

As outlined by Mr. Peres, the agreements envision the election of a Palestinian council, which will have its headquarters in Bethlehem, south of Jerusalem, and will assume administrative responsibility for the rest of the West Bank.

Providing further details of the agreement, Mr. Peres told the Knesset that the Palestinian government will have a strong police force to replace Israeli troops as they are withdrawn. PLO members may be elected to the Palestinian council, he said, and Israel is looking for ways to expedite the transfer of authority.

Although the agreements involve only an initial five-year period of autonomy, they look toward the permanent status -- most probably independence -- of the West Bank and Gaza Strip, which Israel captured in the 1967 Mideast War. Negotiations on that will begin in two years.

"We want to live with them in peace!" Mr. Peres said to the angry shouts of opposition members of the Knesset. "They are human beings just like us! We don't want to control them, to degrade them, to humiliate them. They are not four-legged creatures, they are not in bottles [like cockroaches], they are not animals, they are people like us! And we will live with them in peace!"

Shulamit Aloni, the leader of the leftist Meretz Party, hailed the agreement as one that frees Israel "from a situation in which we are ruling another people."

"We are bound, though as prison guards, to those same prisoners who have no rights," she said.

"Security and everything that impacts on Israelis, not just the settlers [on the West Bank and Gaza Strip], is in Israel's hands," Mr. Rabin said. "Security on the confrontation lines, on Israel's borders or any dividing line is all in our hands."

But opponents of the agreement appeared further enraged by these assurances.

"If you think you are not creating a mini-Libya in Jericho and a mini-Tehran in Gaza, then you are not living in the Middle East," said Benjamin Netanyahu, chairman of the opposition Likud bloc.